What is a Value Proposition?
The value proposition is the sum of the benefits that drive customers to choose one product over another. These benefits can be tangible (functional, related to the material use of the product or service) or intangible (emotional and self-expressive, related to the emotional, social, and identity-driven spheres of the customer).
The value proposition expresses why your target customer chooses your product over competitors’.
It consists of several core elements:
- What is offered and how it is delivered (distinctive product features, sales channels, pre- and post-sales services, etc.)
- The kind of value or benefit associated with the offer (e.g., cost savings, time savings, revenue increase, satisfaction)
- How the value is created (production processes, partners, workforce, environmental and social sustainability)
- Why it is different from everything else on the market (what compels a customer to choose your product instead of a similar one?)
Startups and the Value Proposition
You’re not truly a startup if you can’t clearly articulate your value proposition in a single sentence—or at least, you’ll have a hard time surviving without one.
The value must always be considered from the customer’s perspective. Whether functional, emotional, social, or self-expressive, the perceived value varies depending on the buyer’s specific context.
The value proposition is not a subjective concept defined by the startup’s creator. Rather, the customer defines the real value of the product. If there’s a mismatch between the promised value and perceived value, the company must adjust either the product or its communication.
A strong value proposition should:
- Be superior not only to competitors but to the status quo (the state of the market without the product)
- Be differentiated from competitors and focus on unique benefits of the product/service
- Show a deep understanding of what customers are really looking for
Ultimately, value means more than functionality. It’s the sum of all benefits that guide purchase decisions—tangible and intangible. Since this value is subjective, it differs across customer segments.
A well-crafted value proposition should foster a strong brand-customer relationship and become the foundation for brand positioning.
Brand strategy must go beyond functional benefits and instead focus on the company’s values, personality, and emotional/social/self-expressive benefits.
A brand should embody an ideal, tapping into the emotional and unconscious world of people.
This is how strong brands are built—those capable of achieving strategic goals like customer preference, loyalty, and long-term profitability.
Developing the Value Proposition
Creating a clear and concise value proposition that resonates with all stakeholders (staff, customers, investors) is one of the first and toughest challenges any startup faces—alongside developing a business model.
Why is it so hard? Because the value proposition involves critical choices about the target customer, their needs, and the product itself—at a time when the entrepreneur typically lacks market data or technical certainty.
One way to overcome this is through the customer development process, introduced by Steven G. Blank in his book “The Four Steps to the Epiphany”.
Customer development is a step-by-step method to:
- Identify potential customers
- Understand their problems or needs
- Define how to solve them
This method became a pillar of the lean startup methodology, alongside open-source digital tools and agile product development techniques that reduce waste and boost creativity.
Your value proposition should be a simple, clear statement that centers the customer’s needs, defines the offer, and distinguishes it from the competition.
Before working on websites, landing pages, pitch decks, or product development, make sure you clearly define your value proposition.
Why should your target customer buy your product over another? What needs does it fulfill and how?
